Good day, and welcome to the iAccess Alpha Virtual Best Ideas Winter Investment Conference 2025. The next presenting company is GameSquare Holdings Incorporated. If you'd like to ask a question during this webcast, you may do so at any point during the presentation by clicking the Ask Question button on the left side of your screen. Type your question into the box and hit Send to submit. I'd now like to turn the floor over to today's host, Justin Kenna, CEO of GameSquare Holdings Incorporated. Justin, the floor is yours.
Thank you so much, and thank you to everybody joining us today. I will try to be pretty efficient through the deck, give everybody sort of an overview of the company, our model, why it's unique, and really, I think, how well positioned we are for growth and scale from here, and leave a bit of time for Q&A here at the end. To really effectively, GameSquare, the purpose of GameSquare is really around connecting game publishers and brands with these huge and growing audiences, being these gaming and esports communities. We really are built for the next generation. Just jump through the forward-looking statements here. This past quarter for us, we believe, marked a major turning point. We doubled down on the creator economy. We brought brands deeper into our ecosystem, and we built real momentum into our sales pipeline.
We will kind of run through the numbers and how well positioned we are in the back half of the year here and running into 2026, hitting profitability, but together with this and our digital asset treasury strategy, we've been able to really solidify and clean up our balance sheet, and we've become debt-free, and unlike other debts, which we'll jump into and explore, we're really focused on yield generation, which we've proven out here over the past three months, and we're actually driving real revenue for our core operating business, so we're very unique from this sort of traditional kind of debt, and we believe that in the long term, this will prove out by generating cash within our operating business as well as our digital asset treasury.
So just quickly, for those of you that may be a little newer to this space, I mean, the video game market has a TAM north of $200 billion. You can see there, $230+ billion . And what we find really interesting is that around 60%-65% of that revenue is actually directly through influencers and/or creators. And this is a really big area of focus for us. And you'll sort of see over the back half of the year, as we've really cleaned up our balance sheet and our core strategy, that this is a major sort of area that we've really doubled down on. As we sort of mentioned, GameSquare is really built for the next generation. We're doubling down on the creator economy, which is the largest part of that TAM and continuing to grow.
We're embedding brands deeper, which we'll touch on, and you'll see some of the brands that we're working with in a really material way. We've accelerated our pipeline. Q3 was effectively break-even. Q4 will be profitability for the first time for the company, which we're extremely proud of, and our on-chain strategy is live and differentiated. We'll touch on that, so what is the GameSquare business model, and how does it differ to others in the space? I really touched on at the start the whole purpose around connecting game publishers and brands with these huge audiences. You've just seen that TAM. It's really, really large, but what people don't talk about enough is these audiences are really difficult to reach, right? They're very fragmented. They consume media in different ways through multiple platforms. These communities vary and differ, even within your sort of endemic gaming audiences.
Call of Duty communities are not necessarily Fortnite communities, and the list goes on, so these audiences are hard to reach. And what we've built is an end-to-end model that really handles and helps game publishers and brands reach these digitally native audiences at scale, and so you can see here from the GameSquare ecosystem, we have a slide that has a bit more detail on each of these four segments. Really, certainly from an end-to-end standpoint and within public markets, we really don't have a competitor from an end-to-end standpoint, but certainly within these four segments, we do have competitors. We really believe that this end-to-end model is working. GameSquare, just a quick sort of little bit of history here. It was an RTO onto the Canadian Stock Exchange in October of 2020, so really, we're kind of five years in here.
And I think there's been a lot of cleanup and a lot of work done to really get this ecosystem and model to the point where we're really well positioned for growth and scale. And that's really where we sit today. This end-to-end model is really resonating with game publishers. We're working in really material ways with EA, with Epic Games, with Roblox, and really large-scale brands. And we'll touch on some of those. But this model is really starting to work. And that's kicked off by our data and analytics Stream Hatchet. Stream Hatchet, I think the easiest way for those that are newer to the space to think about Stream Hatchet is what Nielsen is to broadcast television is really what Stream Hatchet is to the gaming and streaming world. We have nine of the top 10 global game publishers as clients.
We really are the de facto market leader when it comes to data and analytics in the space. We are the official data provider for the esports World Cup, which is the largest esports event in the world, with $60 million of prize money over in the Middle East each summer. It's 150 of the top global esports teams competing over there. This gives us, again, a really big competitive advantage. If you think back to how large that TAM is, but the challenge of audiences are fragmented, they're hard to reach, having that data in-house gives us an enormous competitive advantage, specifically into streams two, three, and four. We touched on doubling down on the creator economy. In Q3, we closed the acquisition of Click, which is our talent business. We have sort of 75-80 talent that we manage actively.
This is a cash flow positive business that we believe it's headquartered in Australia. But really, 70%-80% of revenue is from the U.S. And really, with our access to some of the largest talent in the world, this is something that we're really starting to pour gasoline on. We've signed five to six new talent in the U.S. since acquiring Click. We have a number in the pipe. And this is a part of the business that we're really growing and scaling. And again, if you think about these different streams, having talent in-house gives us an enormous competitive advantage. It's a great sales pipeline for brands. As we're integrating and activating large campaigns for publishers and brands at scale, being able to integrate our own talent into these campaigns, again, is just keeping margin in-house, keeping revenue in-house. Again, as a standalone, this is a profitable business.
We are in the process of launching a creator deployment business under Click. That's something to look out for in 2026. We believe that this will be a $15-$20 million revenue business for us in 2026. And really, doubling down again on that creator economy, which we mentioned, is just such a huge area of growth in this space. Our third piece here and the largest, and really from a scalability and a margin perspective, a really big contributor in helping us get to profitability and scale profitability from here. And that's our agency services business. This is a full-service agency broken into two parts, Zoned and GSX. And really, the purpose of breaking this into two parts is that Zoned is more of your creative and strategy agency.
Think about that as really agency of record and a lot of retainer relationships, which is really healthy, really nice business, certainly in public markets. But really breaking this into the two brands, being Zoned and GSX, gives us the ability to work with brands across segments, i.e., we are the agency of record at Zoned for Jack in the Box, but having GSX in-house gives us the ability to work with KFC, McDonald's, and others. Firstly, on Zoned, our creative and strategy agency, I mentioned sort of Jack in the Box with the agency of record for the Dallas Cowboys. We are the agency of record for Dairy MAX. We work really closely with Converse, Topgolf.
We are the extension in many ways of the creative and strategy team at Epic Games, which has become an extremely lucrative client for us, helping integrate a number of brands into Fortnite and into UEFN. Again, for those of you that aren't aware of sort of Fortnite and what Epic Games has done with that game and platform, it's incredibly impressive in terms of taking the most popular game in the world and transforming it into a platform and giving brands and creators the ability to create their own maps within the game and drive audience and actually monetize by driving audience to their own games.
We've been able to take advantage of that within Zoned, our game studio, by creating branded maps and launching different programs and products in-game for Samsung, Mastercard, McDonald's, Prime Energy, and most recently, really successful in integrating Topgolf into Fortnite, as well as a really sort of lucrative and long-standing relationship with Paramount. We were able to help integrate Teenage Mutant Ninja Turtles into Fortnite. And not only are we creating these maps and monetizing, driving audience to these maps, but we're also being paid from a marketing and media perspective. And this, again, is a great example of the GameSquare ecosystem really working, right? And that is not only are we sort of doing the creative and strategy work, but we're doing the marketing, media, creator, influencer deployment around that.
We've done such a great job with Paramount that we actually now co-own the IP to SpongeBob SquarePants with Paramount. We produced our first game earlier in the summer, which we're still collecting sort of monthly royalty from. That was a great success. We've got another five games in the works over the next 18 months. So that's really exciting for us there. GSX is really more focused on the live event space. We've got our live event experiential team that also works really closely with Epic Games and built into our content studio, merchant, consumer product business, and media offering. So really, this team works as one large team. It's a full-service agency business.
This is one of the largest areas of growth for us as we continue to sign and expand with these large retainer relationships, as well as bringing in new business where we have that full-service offering, and then sort of fourth and finally is our owned and operated IP. I think to put simply, instead of just accessing audience for brand and publishers and monetizing, we also want to create and build our own assets that we can monetize and access our own audience over time. Some really good examples here. We own FaZe esports, which is one of the largest esports brands in the world by audience. That gives us a lot of access to audience in the space, these endemic audiences and brands that are interested in the space.
Earlier this year, we announced the largest ever Jersey sponsorship with Rollbit, which was a crypto sponsor of ours, which again fits in really well to our DAT, which I'll touch on. We've closed sponsorship deals with Azuki and Rekt. And FaZe esports is one of the very few profitable esports organizations. We've just moved them into the headquarters where I sit today in Frisco, Texas, headquartered at the Dallas Cowboys, where our largest sort of shareholder, Jerry Jones, obviously owns the most valuable sporting organization in the world. So bringing FaZe esports into the headquarters here and really professionalizing the esports space with boot camps and content, there's a lot of opportunity for us to scale and grow FaZe esports. We also have SpongeBob that I touched on.
We have a piece of IP with the NFL called NFL 4 THE FANS , where we activated the Super Bowl and really helped the NFL reach these youth, global, digitally native audiences at scale. We also just recently launched our collegiate esports platform in conjunction with Barnes & Noble, and sort of the list goes on there. So really, this is the GameSquare ecosystem from an end-to-end standpoint. Again, we certainly have clients that will engage us just for data or just for media or just for campaigns. But really, we're seeing a lot more of these opportunities with the 200-plus brands that we touch and work with and the ability to upsell and cross-sell and really flex our muscle with this ecosystem really working at scale. You'll be able to see here, and you can dive in in your own time.
I want to try to move through this quickly so we can leave time for questions. Some more information around Stream Hatchet, our data and technology business that you'll be able to look into. Click, our talent management business with the recent acquisition, and we'll kind of give you a bit of an overview and a bit more of a deep dive on sort of the numbers there that you can review. Here you'll see our creative services. There's a full-service agency business as I touched on. You have content for the internet generation, in-game activations, IRL live experiences, consumer product, influencer procurement, and media placement. So again, it's that complete full-service agency that we're really getting to scale. You'll see some detail there around FaZe esports.
So jumping into this position for the future, you're now seeing our model, the TAM, the sort of macro environment that we exist within. This, I think, is really key. Number one, we're accelerating our timing to profitability. Our operating business is growing. We're improving margins, and we're bolstered by the yield generation from our DAT. We've acquired our first profitable business in Click. And what I would say is we certainly see an opportunity to get to scale here. We'll kind of talk through the numbers here and moving forward so you get an idea. We'll continue to be opportunistic within the M&A space. But certainly, I think what has changed in terms of our M&A strategy is we've done a lot of work to get debt free. We've done a lot of work to get to profitability.
We're really well positioned to scale, and we're only interested in looking at accretive deals from here on in. Creator talent management is a natural fit for us. We touched on really doubling down on the creator economy. So we'll give you a bit of a look at Click and what that means for the business. We've divested some pieces over the year. You'll see improvement in that bottom line number, improvement in margin. We divested our programmatic ad business. The reality is we're a next-generation media company, right? We are media from platform, in-game activations, and really growing for the next generation of fans. The programmatic business, while it was nice top-line revenue, was single-digit margin and was burning money. We are not interested in burning cash. We think that we have the right model. We're really well positioned for scale from here.
As I mentioned, Q4 is going to be our first profitable quarter, which we're very excited about. Then sort of finally within here is our differentiated digital asset strategy. Again, we'll touch on this. We have a DAT that we believe is best in class. By that, number one, we have an exclusive relationship with Dialectic, which is generating higher-than-market yields for us. We are sort of generating around $400,000 of 100% margin-free cash flow every month at the moment through our ETH yielding system. Since really kind of investing in this space, we've really opened up our core services to the Web3 and crypto space. If you think about it, it really does make a lot of sense, right? You have a lot of these blockchain game developers, neobanks looking for first-time depositors, wallets, NFT brands looking for live events at Art Basel.
There's a lot of opportunity. The reality is that a lot of these Web3 crypto-native companies are really looking to access Web2 audiences at scale. That's where we come in. So through our agency services, our live event business, our media, our data and technology, we've now opened up a whole new sort of revenue vertical off the back of our DAT. Jumping in again, coming up on sort of 10 minutes left, I'll jump through these pretty quickly. At any Q&A I can't get to, I'll reach out to each of those sort of questions personally and make sure they all get answered. Our new acquisitions, Click, again, we've touched on this, makes a whole lot of sense, right? We've worked with influencers and creators within the GameSquare ecosystem since its existence.
And now to have a full-service talent management business in-house, again, just gives us a huge competitive advantage, right? We are keeping those dollars in-house. It's a really healthy business that we believe we can really scale in a meaningful way. You can see there annualized sort of back half of 2025 estimates around $14.5 million of revenue, $1 and a bit million of EBITDA. And then you start to look at, again, the scale that we can bring with the influencers we work with in the U.S., the talent, and the brands. And so we're really bullish about what that's going to look like in 2026. So jumping in here, pro forma guidance back half of the year. I mean, what are we sort of trading at right now? We are a market cap of around $52 million today.
And I think, again, Q3 was a major turning point for us. If you look at from Q2 to Q3 in terms of the complete balance sheet transformation that took place in our ability to pay off all of our debt, you'll see in a moment the improvement we made from a bottom line perspective around EBITDA. It was north of $3 million bottom line improvement. And how well sort of how really, truly undervalued we are. And we believe that with our Q4 numbers and 2026 profitability, our ability to kind of scale from here, there's a great opportunity for investors to get in here where we are trading really at our ETH holdings. And so if you have a look at our pro forma guidance for the back half of the year, second half revenue around $37 million, around $3 million of EBITDA.
Again, huge improvement year on year and showing really Q on Q improvement at the moment. I think a great way to kind of think about 2026. We haven't given guidance to market yet. We will. But a great way to kind of think about that sort of 2026 number would be annualizing these numbers with sort of around 25% organic growth is really where we expect to be in 2026. So really healthy and starting to get to scale. This next slide here, I think, is a great one just around sort of showing that improvement. So Q3, and again, I'd touch on Q4 being the largest quarter for us from a seasonality perspective. And from our modeling for the back half of the year, we are very much on track to hit our numbers.
You can see their gross profit of $6.7 million, really healthy margin, adjusted EBITDA at $200,000 loss from north of $3 million to the quarter before. You can really see that sequential improvement and net income from continuing ops at around $6 million. Really proud of those Q3 numbers and how well positioned for growth we are. I'm not usually a huge fan of sort of logo slides, but I love this one because we work with these brands in really meaningful ways. These are wins in the past 90 days of sort of deals of over $200,000. Again, some pretty recognizable logos on this one with the Dallas Cowboys star, Epic Games, Mastercard, Paramount, LEGO Fortnite, Ubisoft. We're really proud of this slide, and it's going to continue to grow. Just quickly here, I've touched on this a little bit.
Again, our treasury strategy is very different to other DATs in the space. One is this ETH high yield strategy. The reality is for us, this is a cash management strategy. We're generating higher-than-market yields. We're generating higher-than-cash yields. Kind of mentioned before, around $400,000 of free cash flow every month. So this is something that is really helping us push margin, and it's generating real cash for our business that we'll be able to buy back shares with, and we're going to continue to, especially down here at these prices, and really invest in growth in our business from the cash flow that our ETH is spitting off. The NFTs that we own, we actually, interestingly enough, have a couple of offers on those NFTs. We're generating yield off of those as well.
They've really opened up a lot of revenue for us into our Web3 operating plan, having close to $8 million in new revenue deals from Web3 sort of projects. What I'd say on the NFT piece is this is not a major part of the strategy. Really, we think about as less than 10% of our overall strategy and certainly something that we'll continue to look at and be opportunistic with. We do have some offers on those NFTs currently that we are assessing. Then just having a very quick look, this is the DAT at the end of Q3. Obviously, this has changed a little bit in terms of the numbers.
But it gives you a good idea of sort of the amount of ETH that we hold and really just in comparison to market cap, how truly undervalued we are, which again, you can see here in slide 18, which is as of October 20. But we can get shareholders and those interested sort of a really up-to-date view here. But again, we are effectively trading at ETH. When you think about kind of 2026, close to a $100 million revenue business, it's profitable. It's debt-free. So we think that there's a real opportunity currently for investors to get in at these sort of cheaper prices. You have a look here. This is our sort of experienced management team and board. We really do have a blue-chip board for a company of our size.
You'll see there Tom Walker, who's the CFO of the Dallas Cowboys and the Jones Family Trust. He's the head of our audit committee. You have Travis Goff, who's the president of Goff Capital. Jeremi Gorman, who runs commercial at Fanatics and all of the ad strategy. He was formerly the chief ad officer at Netflix and the chief business officer at Snapchat. Stu Porter, CEO and founder of Denham Capital. And you can see there are key investors with Jerry Jones, the owner of the Dallas Cowboys, and John Goff, CEO and Crescent Real Estate and founder of Goff Capital. So really experienced management team, but really a blue-chip board for a company of our size. This deck is available for those wanting to see sort of some of the case studies that we work on.
There's a number of case studies here at the back where you can start to see that GameSquare ecosystem and model really working at scale. I'm going to jump over to the Q&A tab. I know we've only got four minutes left, so apologies. But as I said, if you want to type in any questions in there, I can also certainly make sure that I get back to each and every one of you. But thanks to everybody for the time, and I'll jump over to Q&A quickly now. Okay. So just having a look through some of these. When will GameSquare purchase more Ethereum? Look, great question. I think that at the moment, we're not purchasing Ethereum because it actually makes more sense to buy back our stock given where we trade and how sort of undervalued we are. We have a really healthy holding of ETH.
We have a very clear strategy on price on the way up as to when we would sort of divest and differentiate strategy there. But at the moment, we're not purchasing more. We're also certainly not selling it. Our cost base is kind of in the low to mid-threes. So we're really comfortable with where all that sits. We're not in a position where we need to sell it. But certainly, right now, it makes more sense for us to use that cash to buy back our stock. Leads into another question, when we'll see larger buyback of Game stock? I think you'll see, Dennis, we've made two different tranches of buyback so far. We will continue to be buying back the stock. So rest assured there, I'm not comfortable by any extent in terms of where we trade.
So we will continue to buy back stock and be aggressive there. We have approval around five million from our board on buybacks. I think in 2026, you'll see that increase. And we'll continue to be aggressive and make sure that we get this back trading where it should be. Another question, can you quantify expected Q3 and Q4 sequential revenue growth? Yeah. So I did in the presentation, but you can go back and have a look there on the guidance in the back half of the year. And hopefully, that gives people a good idea of 2026 in terms of sort of revenue growth and EBITDA and what we're looking at in terms of where we think we can hit for 2026. How should investors think about gross margin cadence given the shift towards higher margin mix? Yeah, it's a great question.
I think that Q3 was a really high-margin quarter. The reality is there will be some quarters where margin does fluctuate a little bit, and that is due to the different sort of natures of the underlying businesses, right? If you think about those four streams and the revenue mix, something like FaZe esports, which is a profitable business, but quarter to quarter, it can fluctuate depending on prize money and the tournaments and performance, digital sticker revenue, and things like that, but as a rough guide, our margins overall, since the divestment of our programmatic business, has gone from margins in the high teens and to 20% to really now thinking about 40%-45% margin, so I think a safe kind of number is really around that 40% margin, and I think you'll see margin and revenue really grow in the back half of the year.
We're up for time there. I will make sure that I reach out to each of you that's asked the question. But yeah, thank you so much for the time. Really appreciate it. And I'll make sure that I follow up with all of you. Thanks.
Thank you very much. That concludes GameSquare Holdings, Inc. presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.